Talking Numbers

The Stoxx Europe 600 index, which contains stocks in 18 European Union countries, is up 13 percent since the start of the year. What’s more, it’s close to reaching its 2000 and 2007 highs, both of which were near the 400 level. The Stoxx 600 closed at 387.68 on Tuesday.

Helping to fuel the recent gains in European stocks is excitement over the European Central Bank’s stimulus policy, expected to begin later this month.

According to one market observer, Europe may be the better bet for investors compared to the United States—at least for the near term.

“This is a trade, not an investment,” said Gina Sanchez, founder of Chantico Global. She said it’s not just the ECB’s version of quantitative easing that makes European stocks a buy.

“We’ve also seen some supportive macro data coming out of Europe showing some move towards a recovery,” said Sanchez, a CNBC contributor. “We’re seeing very positive spending data out Germany. We saw an unexpected fall in jobless claims in Spain.”

However, she doesn’t expect too much outperformance. “This still has some room to go, but it probably isn’t going to go that far,” Sanchez said.

Bonds have been selling off, causing interest rates to rise. At the start of February, the yield on the U.S. Treasury 10-year note was 1.65 percent. It is currently hovering near the 2.1 percent mark.

Meanwhile, stocks have rallied. The S&P 500 is up nearly 3 percent in the past month.

But while it may seem that money is flowing out of bonds and into stocks, one trader says it’s a bit more nuanced than that.

“We’ve seen a repositioning in the market for higher rates,” said Gina Sanchez, founder of Chantico Global. For that reason, she sees investors shying away from interest-sensitive investments like REITs and utilities.

Sanchez, a CNBC contributor, says the market is expecting a Federal Reserve rate hike in June. That cites the growing difference in yields between short-term and long-term Treasury bonds.

The technicals agree with Sanchez, based on the chart work of Craig Johnson, senior technical research strategist at Piper Jaffray. He said that many of the utilities and REITs are breaking below their 200-day moving averages.

Though it has been on a historic winning streak, King Dollar has come dangerously close to running out of luck.

Oh sure, the U.S. dollar index has just completed a record eight consecutive monthly gains, the longest that has happened since it was created four decades ago. Since the start of July, the dollar index has gained 19.5 percent.

But in February, it was barely able to squeak out a win and was up just 0.5 percent on the month. That was the weakest gain out of the last eight.

However, not every trader is convinced the dollar’s time in the sun is done.

“I think this is actually a pause,” said Gina Sanchez, founder of Chantico Global. “The most important thing for the outlook on the dollar is going to be the expectation for future interest rates. And as long as those continue to remain hawkish – the belief that eventually we’re going to see an interest rate hike — then you’re going to continue to see strength in the dollar.”

Sanchez expects the Federal Reserve will hold off on a rate hike until September. In the meantime, the European Central Bank in the midst of quantitative easing, potentially weakening the euro versus the buck.

The rebound in interest rates has taken its toll on last year’s favorite trade.

The Dow Jones utilities average fell 7 percent in February as rates began rising from near-record lows. The yield on the U.S. Treasury 10-year note climbed from 1.65 percent to a little more than 2 percent.

Because utilities pay a reliable and steady stream of dividends, investors treat the sector like bonds. That is, when rates move higher, utility stock prices fall.

According to one industry watcher, the sector is in for some more pain.

“The markets are positioning themselves for an interest rate hike,” said Gina Sanchez, founder of Chantico Global. “However, the other side to this story is that the valuations of most of these utilities have been very, very vulnerable for some time.”

As of now, the Dow Jones utilities average currently trades at 16.8 times forward expected earnings, according to data from Birinyi Associates. That’s roughly in line with the Dow Jones industrial average. However, the utilities index is also priced at 19.6 times its trailing 12-month earnings compared to the industrial’s multiple of 17.1.

Gold bugs looking to play the metal have found a winning strategy so far in 2015: buying the gold miners.

The ETF tracking gold miner stocks (trading under the ticker symbol GDX) is up 14 percent year to date while gold has gained less than 2 percent.

Yet despite the great returns this year, the GDX had a volatile several months and is only now flat since the start of 2014.

Some traders are saying to stay away from the sector entirely.

“This might be a good time to get out,” said Erin Gibbs, equity chief investment officer at S&P Capital IQ Global Market Intelligence.

She said the miners recently benefited from a rally in the U.S. dollar, bringing costs down overseas where most gold mines are to be found.

“However, I still see these guys as underperforming the broader market,” said Gibbs, who is responsible for over $15 billion in assets under advisory. “I need more than just a rising dollar in order to find these companies attractive.”

The technicals are also negative, according to the chart work of Todd Gordon, founder of TradingAnalysis.com.

The CBOE Volatility Index (the “VIX”), which started the month off at 20, is now trading below 14. The VIX, which is a measure of the market’s expectations of future volatility in the S&P 500, is often called the fear index because it tends to rally when stocks sell off.

But with the VIX declining for much of this month, does it mean the market has become too complacent?

One portfolio advisor says the VIX should be at these levels. “There is a lot less uncertainty,” said Erin Gibbs, equity chief investment officer at S&P Capital IQ Global Market Intelligence.

She sees lessened uncertainty with Greece, stabilizing oil prices and the low interest-rate expectations for the near term as reasons why volatility will stay down.

“When you combine those three factors, it is rational at the time being to have low volatility,” said Gibbs, who has over $15 billion in assets under advisory.

However, the technicals are showing the VIX may move higher, based on the chart work of Todd Gordon, founder of TradingAnalysis.com. He disagrees with Gibbs on her oil and interest rate outlooks.

Despite having a down day on Wednesday, the Nasdaq Composite is still thisclose to breaking 5,000 and ever nearer to breaking its Tech Bubble record.

Investors are keeping a close eye on the tech-heavy index, which is now 3 percent away from piercing its all-time intraday of 5132.52 set on March 10, 2000.

Lately, the Nasdaq has been wowing investors with all sorts of impressive achievements. Until Wednesday, it had 10 up days in a row, the longest such streak since 2009. Month-to-date, the index is up 7.5 percent. If it can hold these levels until Friday at the close, that would make it the largest monthly percent gain in over two years. What’s more, the Nasdaq remains on its way to its first-ever nine consecutive quarters of gains.

But not all traders are putting much weight into the Nasdaq’s old highs.

Kevin Caron, portfolio manager at Washington Crossing Advisors, maintains that investors should focus on the fact that the index has outperformed over the past several years.

The major market indexes may be at or near all-time highs but not everyone is participating.

The Dow Jones transportation average has underperformed both the S&P 500 and the Dow industrials since the start of the year. While the S&P and the Dow are up 2.9 and 2.3 percent, respectively, the transports are just about flat so far in 2015.

Some may see this is an ominous sign for the markets. After all, Dow Theory—one of the oldest market philosophies out there—holds that a rally in transports is required to confirm a bull market in the major averages.

But Ari Wald, head of technical analysis at Oppenheimer & Co., says there is no cause for alarm.

“With Dow Theory, it’s either on a buy signal or a sell signal at all times,” Wald said. The Dow transports have “actually been on a buy signal since late 2011.”

Both the Dow transports and industrials confirmed the bull market in November and Wald expects transports will soon confirm it once more. “So nothing to worry about in Dow Theory,” he added.

Wald is confident transports will rally and says the technicals show the transportation sector as a buy.

“The underperformance over the past few months is a tactical opportunity,” he said.

The widening spread between Brent and West Texas Intermediate crude oil prices allows refiners to buy cheaper U.S. oil and sell refined oil with a bigger margin. Since the start of February, the spread has jumped from $4.50 to its current level of $9.43.

The spread expanded for a number of reasons, Gheit said, including increased U.S. shale oil production and disruptions in Libya, Nigeria and other parts of the Middle East. That “raised Brent crude prices faster than WTI and widened the crude differential to record levels, giving U.S. refiners significant competitive cost advantage,” he said.

According to Goldman Sachs, nearly 20 percent of hedge funds surveyed own shares in the tech giant, and it is the biggest position in one out of every eight funds.

For one portfolio manager, Apple is a required stock for any fund going long the market.

“Apple has changed in terms of how it is used by hedge funds,” said Kevin Caron of Washington Crossing Advisors.

“It has become such a large company that if you have a bullish point of view on the market, you are forced to own Apple,” he said.

Caron notes that the tech giant is now about 4 percent of the S&P 500 and is more than twice the value of the second-largest publicly traded company, Exxon Mobil.

“It has become a beta play on the market,” said Caron, whose firm’s parent company, Stifel Nicolaus, makes a market in Apple. “If you’re running a hedge fund and you feel good about the market, I think you have to own Apple.”

And based on the chart work of one prominent technician, those hedge funds owning Apple shares will see more upside ahead in the position.

About Talking Numbers

TALKING NUMBERS is a fully integrated media experience, hosted by CNBC and Yahoo Finance, that takes a 360° approach to trading-highlighting the best investment opportunities by analyzing stocks both a technical and a fundamental point of view. But TALKING NUMBERS will do more than just tell investors what to buy; it will show them HOW to buy. Our goal: teach viewers how to harness both technical and fundamental data points so they can become better investors.